Mar 282012
 
 March 28, 2012  Posted by at 12:45 pm Finance
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G. G. Bain Weighing The Jockeys 1908 “Racing — weighing the jockeys. New York”

There are things that many people in the developed world take for granted, especially in the states and Western Europe. Jobs, health benefits, social safety nets, affordable credit for homes/cars/etc. and cheap energy certainly rank among the most vital expectations, but even those things have been called into question within the mainstream consciousness, if for no other reason than the fact that they have simply evaporated in many locations. What hasn’t really disappeared, though, are the [mindless] entertainment industries – i.e. sports, movies and video games.

When is the last time you were around a person or group of people who were discussing the latest trends in the sports world and their predictions for how a team was going to perform next year, or the year after that? How about someone who was talking about a great movie he/she just saw and how they can’t wait for the sequel to come out? Or, for the younger crowd, perhaps you were listening to someone talk about how realistic the latest game for XBOX360 looks. In my generation, we have the pleasure of being surrounded by discussion of all three at the same time.

These are not unintelligent or completely uninformed people, either. They may be well aware of the fact that Western economies are swirling down toilet bowls and that the world faces a whole range of intractable energy/environmental issues (although, they usually convince themselves that it’s really not THAT bad). Still, no matter how informed they are, they refuse to stop talking about the entertainment culture as if it will keep chugging along as it always has, no matter what happens between now and the end of the world as we know it.

 

 

That is despite the fact that many of these industries are struggling just as much as your typical financial, manufacturing or retail business. Just last year it was entirely unclear whether the NFL and NBA (American professional football and basketball, respectively) would even be able to schedule any games for the season, as the players and owners could not agree on how much each faction would get of a still large, yet rapidly dwindling pie of profits. Those issues were finally resolved at the last minute, but it’s safe to say that they will be returning with a vengeance in short order. As it is, many sports fans get depressed for days after their team loses a big game.

One can only imagine the post-traumatic stress that will envelop the average sports-loving American when his/her team is lost in the depths of credit collapse for all time, forever more. Whatever will the die-hard professional sports fans do when they have to go without games for an entire season…or two, or three?? Let’s just say that I would not want to be living in New York or L.A. when the Knicks and Lakers go down for the count, and most definitely not in Oakland when the Raiders get raided by their creditors.

 

 

The movie industry is no better, and has already been hit quite hard since the beginning of the financial crisis in 2008. Movie studios require a certain amount of funding upfront before they can give the thumbs up for expensive productions to get underway or to continue, and those are funds that simply aren’t available for many of the studios right now, including relatively large ones. For every fancy, whiz-bang movie that comes out into theatres these days, there are perhaps dozens of others that were downsized, terminated or put on hold indefinitely.

How will the dedicated moviegoers feel when the only thing playing at the local cinema is some B-rated picture with no-name actors and cheap special effects, or when the sequel to their favorite blockbuster movie of last Summer simply doesn’t come out? The New York Times reports on this deepening trend as is it relates to one the popular studios – DreamWorks:

Will Dreamworks be able to line up new financing when movies are struggling

 

Behind the scenes, however, executives at DreamWorks and its partners are quietly opening discussions that in the next few months will determine its future and answer a broader question about the state of Hollywood: Can a faltering film industry sustain a company that insists on making ambitious, Oscar-caliber, studio-size films – but without the deep pockets of a Viacom, which owns Paramount Pictures, or a News Corp., the parent of 20th Century Fox?

 

 

Over the years, small, independently financed companies – some with their own distribution mechanisms, others, like DreamWorks, without – have generated hits, only to disappear or be merged into larger corporations. Miramax Films was acquired by Disney after releasing “The Crying Game,” a box-office success and best picture nominee; Disney has since sold the unit. Summit Entertainment was recently sold to Lions Gate; Summit investors saw the end of their blockbuster “Twilight” series as a prime moment to cash out.

 

For smaller film companies, the hunger for capital is a perennial problem. Making a studio-level film can require an immediate investment of $100 million or more. But even the hits pay back their investors slowly, over a cycle that may last as long as 10 years, as movies are sold successively in theaters, on DVDs, to Internet streaming and cable television services and so on.

 

DreamWorks is now in the ticklish position of having nearly exhausted its first round of financing, which included $325 million in equity from Reliance, and a matching $325 million in lending from banks led by J. P. Morgan Securities. An original plan called for more from each, but the struggles of the national economy brought the investment up short. Now, DreamWorks is left to line up new financing at a time when movies are struggling.

 

Attendance at North American movie theaters hit a 16-year low last year. DVD sales continue to drop. Although some emerging overseas markets are picking up steam, Europe and other important sales territories are uneven. And there are no indications of an immediate reversal of the trends.

 

 

Perhaps the most disappointment will be felt by the younger generations (by this, I mean all the way up to 30 years old), who will not only miss out on their favorite sporting events and movies, but will also have to live without ever-advancing gaming consoles and video games. The fact is that it’s already a couple hundred bucks to get your hands on the latest console, and another fifty bucks a pop for the latest games that go with them.

Most middle to upper-middle class parents cannot afford to keep up with this expense of their children for much longer, and most young adults cannot even come close, as they find themselves unemployed and swamped with debt. What will these idle youths do when they are priced out of the gaming market and/or they can’t even find a single “Game” left in town? Helia Ebrahimi reports for the Telegraph:

Game to shut 277 UK stores and cut up to 2,500 jobs

 

The decision will also spark a temporary ban on all gift vouchers at the store, which sells PlayStation and Xbox videos.

 

Game – the struggling computer games retailer – was put into administration this morning after failing to reach a rescue deal over the weekend. It will now close half the UK portfolio of shops – focusing its efforts on saving the remaining 333 UK stores for a possible deal over the next week.

 

“We just need a bit more time to push the deal over the line,” said administrator Mike Jervis of PwC.

 

“There is a huge amount of complexity in the Game situation, because of the technology involved and the extent of the overseas portfolio.”

 

The chain, which employs 385 staff at its headquarters in Basingstoke, Hampshire, and around 5,100 in its UK stores, has suffered dire trading in recent months, while some suppliers refused to stock the retailer as its worsening finances came under increased scrutiny.

 

RBS is leading a “lender-led offer” that would see a debt-for-equity swap for the portfolio of shops. However, sources said that this remained a “Plan B option” with all lenders preferring to see a deal struck with a third party.

 

Game suffered a dismal Christmas and was later forced to ask suppliers for more generous trading terms. However, many stopped supplying it with new releases, such as Mass Effect 3 and Street Fighter X Tekken, leaving fans disappointed and adding to the group’s trading woes.

 

Game agreed fresh lending facilities with banks last month and began seeking access to alternative sources of funding earlier this month.

 

The group has already signalled that losses for the year to the end of January are likely to be around £18m.

These are just the first cracks in a rapidly widening chasm that will eventually swallow up entire entertainment industries whole, along with the advertising and retail jobs/revenues that rely on them. The somewhat ironic and sad thing of it is, I engage in quite a few casual conversations about sports and movies with my friends, even though I know it’s a fleeting and, ultimately, unimportant dialogue. I wonder to myself, what will life be like when all of the live broadcasts and the new releases and the playoffs and the fantasy leagues come to an end, and we are left to entertain ourselves with music, books and, if we’re lucky, plays?

Yes, I do realize that this may be the least of our concerns in the near future, but that’s kind of the point – it’s all part and parcel of a broader story of dashed expectations, forced losses and psychosocial meltdown. It is the way in which economic collapse metastacizes in all the organs of a cultural society. When multiple generations around the world would rather go without food for a day than the season-ticketed event or the latest computer/video game, and may be forced to go without all three, you know we are in for rough times ahead.

Home Forums The Death of the Entertainment Industry

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March 28, 2012 at 12:45 pm #8574

ashvin

G. G. Bain Weighing The Jockeys 1908 “Racing — weighing the jockeys. New York” There are things that many people in the developed world take for gran
[See the full post at: The Death of the Entertainment Industry]

March 28, 2012 at 5:36 pm #2136

Basseterre Kitona

Although I can imagine contraction coming up in the realm of professional sports, I suspect that it will remain one of the last holdouts despite economic crisis. Even during good times, many successful teams are operated at a financial loss as these enterprises are often just expensive toys for very wealthy men.

As long as the super rich keep getting super richer, which seems to be a paradigm that will fight to the death, I’d imagine that there will continue to be (at least some) professional sports teams. And aside from the financial subsidy of the super rich, sports teams also benefit from the collective efforts of communities as a grass roots level.

Movies and video games, however, are industries that probably have a much less gilded future.

March 28, 2012 at 7:58 pm #2137

Glennda

One of the biggest hits to the movie and game markets has been free access to movies through hulu and some other on-line portals to all kinds of media. I just hook up my laptop with a cable to my big screen aka TV, when I watch an occasional movie or anime. I’ve not taken to this form of entertainment as I never had the time or money years ago when I was a single working mom. If this had existed in those years, I would likely have used it as a major form of entertainment for myself and my kids.

Also free on-line games exist like Lord of the Rings game, along with numerous facebook games. These games seem to be one of the current places that foreign capital find to park investment money. Advertising through these sites can rake in substancial money.

The internet has become my main source of news and entertainment, far more than magazines, newspapers or movies ever did.

The real Cold Turkey moment will come when I can no longer go to my favorite blogs and news sites. I’ve actually become more of a news junkie, since I use the internet to find really good sources. Some people spend lots of time with online brousing or shopping; I use it like a gigantic library.

People with high end phones can look up anything during a converstion and throw in what wikapedia says about a subject as the final say rather than people hashing out their own thoughts. I’ve been in conversations where some (younger) person says, “No looking up on your phone”, when they want a “real” conversation. Just looking things up can be a real discussion stopper.

When the batteries stay uncharged and the lights go out then we’ll see the withdrawal symptons. Luckily I have a real brick and mortar Library just 3 blocks from my house. But even they have more become a place to use a free internet and computer to cruise the net. I hope they still have real books when the Library reopens from its remodling.

March 28, 2012 at 8:00 pm #2138

Reverse Engineer

And people say nothing good is going to come from Collapse! The sooner that Professional Sports, Television and Movies and Video Games are relegated to the dustbin of history, the better off we will be.

Kids will actually have to take a REAL bat and ball outside instead of swinging away for the fences with a Joystick (future Drone Commmander!). You can go root for the local tall kids shooting hoops in the schoolyard instead of the pituitary cases recruited by the NBA. Finally, at LAST we will be free of hearing about the latest round of rehab for Lindsay Lohan.

If you absolutely MUST watch a movie, at least for as long as the DVD players still work, there are so many titles already made since the beginning of film you could watch a different one every day for your entire life and never repeat a single one. Then you can get started on all the TV Episodes of “Gunsmoke” and “Bonanza”. The CLASSICS! LOL.

On the Schaudenfreude level, nothing will please me more than watching Hollywood and Pro Sports get flushed down the Toilet.

RE

http://www.doomsteaddiner.org

March 28, 2012 at 10:03 pm #2141

mrawlings

I totally agree with BK, Glenda and RE. But I also wanted to ask if anyone else out there was finding themselves at times unable to distract themselves with mindless entertainment. Increasingly over the course of the last sixteen months, I have at times struggled with the conflicting sense that while I’d like to sit down in front of a streaming Netflix movie or TV show, I can’t bring myself to care what is happening to the characters or in the story. In the past I could have vegged out to just about anything, but in light of the very serious and concrete events unfolding around the globe, I find myself more and more turning off the “TV” and searching for lectures, articles, blogs, etc. I’m becoming more and more addicted to reality.

March 28, 2012 at 10:44 pm #2145

jal

hehehe!

Every is telling their age.

March 28, 2012 at 11:07 pm #2146

Golden Oxen

The quicker they go clean the better. Nothing could be more beneficial to the youth of today. Perhaps they will learn to read a fine work of classical literature, or develop a love for the game of chess, play a musical instrument, enjoy Issac Waltons world of angling, mimick Thoreau and try some solitude with nature, anything but the imbecility and wothlessness of the entertainment industry and its endless corrupting commercials.

March 28, 2012 at 11:23 pm #2147

bluebird

Oh, I agree that the Internets are a gigantic library. There is a wealth of information that one can research 24/7. I am going to miss it terribly if TPTB block access. :(

However, we also have hundreds, if not thousands of books, many that I buy but have not yet taken the time to read them (because I am reading the web, lol)

I rarely watch TV or go see a movie, mindless entertainment is not for me. In fact, it had been several months that I didn’t even watch the local TV news. In those few months, the stations had employed new people and I didn’t even recognize them.

March 28, 2012 at 11:41 pm #2148

vk

Great post! I really do enjoy movies, champions league football and video gaming once in a while. Something to really ponder given that they are so ubiquitous in our daily lives. What will people do without facebook and twitter? Gasp!

March 29, 2012 at 12:21 am #2150

FrankRichards

Don’t plan on kissing the internet good bye anytime soon. It was designed to be unkillable. (That is one of the reasons SOPA was withdrawn. DNS is much more resilient than Hollywood thought.)

Also, for reasons that only geezers remember, many bits of the internet were designed to work over dialup as well as nailed up.

In the instant case, telling my newsreader to follow alt.econoloon.TAE would simply get it right, whereas RSS wants me to subscribe to the comments on each post separately. Dave Winer never was a big picture guy.

March 29, 2012 at 2:43 am #2152

jal

vk post=1749 wrote: … What will people do without facebook and twitter? Gasp!

People are loosing their communication, debating, discussing, public speaking skills.

I’ve seen 3 pre-teens sitting in the same room and each is involved in his own phone game. No communications what so ever. Sad.

March 29, 2012 at 4:35 am #2153

YesMaybe

mrawlings:

I’m with ya, kind of. I used to watch a ton of shows and movies, and I do get this “who cares?” response to it now. Of course, I almost never try it, so it’s more of a “who cares?” attitude which prevents me from trying. There are some things which I do like, such as some dumbassed comedies. But I can’t bring myself to watch them either, even though they make me laugh, because I invariably have a response along the lines of “Ain’t I dehumanized enough without this? How can I sit here watching this crap?” I figured I’ve reached the point where where the guilt in this ‘guilty pleasure’ is just too much and too immediate to suffer for the dumb pleasure.

Ashvin:

TV will be one of the last things to go. It is far more “systemically important” than the biggest banks. Movies and sports could wither and disappear, but TV will be propped up at any cost. By that I mean both TV programming (doesn’t matter if low budgets mean it’s shitty, it’s shitty anway) and the production of TV sets. To put it differently: TV isn’t entertainment, it’s the fabric of american life.

March 29, 2012 at 5:35 am #2154

Reverse Engineer

mrawlings post=1742 wrote: I totally agree with BK, Glenda and RE. But I also wanted to ask if anyone else out there was finding themselves at times unable to distract themselves with mindless entertainment. Increasingly over the course of the last sixteen months, I have at times struggled with the conflicting sense that while I’d like to sit down in front of a streaming Netflix movie or TV show, I can’t bring myself to care what is happening to the characters or in the story. In the past I could have vegged out to just about anything, but in light of the very serious and concrete events unfolding around the globe, I find myself more and more turning off the “TV” and searching for lectures, articles, blogs, etc. I’m becoming more and more addicted to reality.

I quit on TV over a decade ago now, haven’t owned one in all that time. The only time I see any TV is when I am in a Hotel out of town. My last trip a few weeks ago completely made me puke. The only thing I found to watch for a few minutes was Myth Busters. Otherwise it was all infomercials. Any normal content was all Pay TV/Movies. There was no TV Guide or schedule either I could find on the VERY complicated Menu.

I stopped following any Pro Sports teams 20 years ago. if anybody asks me a question about Football, if it came after about Joe Montana I have no clue who the players are or what city the team resides in now.

Far as Games are concerned, I gave those up after they left the Arcades after my college years, when I dropped endless Quarters into Space Invaders, Asteroids and Missile Command. OK, I briefly got hooked on Sid Meier’s “Civilization” on my computer in the mid 1990s, but that was the last one.

Its all just complete mind numbing JUNK! I admit to being a complete Pop Culture SPONGE for the first 30 or so years of my life, but at least Cartoons like Bullwinkle were creative and funny. Pokemon? Transformers? BLEECCHHH!

Anyhow, as far as Entertainement goes, for me observing the Collapse in Progress provides hours of Nightly Entertainment. I’ll miss the Internet when it is gone, but I suspect I will be kept very busy and entertained just trying to figure out how to live for another day when that occurs.

RE

http://www.doomsteaddiner.org

March 29, 2012 at 6:37 am #2155

ben

frank mccourt (not of angela’s ashes fame) bought the los angeles dodgers completely on margin in 2004 for 430M, raided the team to the tune of 100M, filed the team for bankruptcy in july of last year, ate his last dodger dog in september, and sold the club at auction yesterday for 2.15B. magic johnson, retired basketball great and one of my childhood heroes, became a minority owner, and a minority owner. dodger fans immediately made a pilgrimage to his statue outside where the los angeles lakers play:

http://latimesblogs.latimes.com/.a/6a00d8341c630a53ef016303668394970d-640wi

here’s the real magic, standing behind a seated angela merkel:

http://www.chadmoriyama.com/wp-content/uploads/2012/01/MagicJohnsonOwner-516×340.jpg

March 29, 2012 at 7:07 am #2156

Viscount St. Albans

Ash: I disagree.
A glance around the globe suggests the entertainment industry persists no matter what. It’s as fundamental as birth and death.

10 poorest countries on the planet include: Somalia, Burkina Faso, Democratic Republic of Congo and Niger….

Some news headlines from the past week….

(1st)
“Congo meet Burkina Faso and Niger on successive weekends at the start of June in World Cup qualifiers and then play Uganda away in the second leg of their African Nations Cup first round qualifier.”
http://af.reuters.com/article/congoNews/idAFB9283020120322

(2nd)
“Officials from Somali youth & sports ministry, Somali National Olympic committee and Somali Football Federation on Wednesday paid an hour-long inspection to the country’s old football facility Stadium Banadir which is being under reconstruction”

http://ciyaartoy.com/2012/03/somali-officials-inspect-the-under-construction-soccer-facility/

March 29, 2012 at 7:40 am #2157

skipbreakfast

The exponential expansion in credit was in absolute lockstep with the expansion of “product” across media platforms (the 1000 channel universe, the “multi-plex”, etc.). Now there is too much to watch. No one can keep up, as niche markets divide us into a million micro-demographics. I think it has become a rather sad state of affairs. While there were some exemplary creative achievements, I feel something is lost. I have a nostalgia for the era (which I barely caught) when everyone waited for the one big movie that dominated our consciousness for years (Star Wars for example) and everyone saw Johnny Carson the night before. It’s been said that we can never have another Beatles or Rolling Stones, because the music business is now too fractured, driven as it is by ultra-high turnover of art (product!) and artists. So I sort of welcome a shrinking of that marketplace (though don’t welcome watching great people painfully lose their livlihoods as a result).

Industries like the Canadian film/TV industry will be in for a much greater shock however. More than 99% of all Canadian TV productions “lose” money–they are primarily financed by the government in the interests of protecting national culture from the big American juggernaut. Through this almost total subsidization of an entire industry, companies grew exponentially (there’s that word again) by producing (usually terrible) TV shows that never made back anything even close to the original government investment. When financial credit truly tightens, these cultural subsidies will vanish fast, and an entire “illusion of an industry” will vanish with it. Because when something never makes a profit, can it really be called an industry anyhow?

March 29, 2012 at 7:56 am #2158

skipbreakfast

Oh, just wanted to add, though: of course deflation will bring down the costs of movie production with it. And yes, I agree credit will vanish faster than the costs can come down, and so there will be less entertainment product made as a result. Less risk in the riskiest business of all surely means fewer movies. But I do expect the directors and crews and movie stars will quietly cut their rates, as the budgets shrink. We’ll still see the movie stars on the screen, I have no doubt. Just a little less often, and they won’t be making $25 million per picture. Hey, on the brighter side, there are good reasons to believe that movies will get better when the budgets come down too.

March 29, 2012 at 8:07 am #2159

Salopian

I agree with #1742 mrawling; I thought it was just me who is disillusioned with a lot of popular movies. Of late I get bored with vacuous action/ cgi that does not compensate for weak characters and infantile dialogue. I tend to watch a lot of documentaries. However I have just discovered a treasure of wonderful old Hitchcock titles that sparkle with wit.
On the general topic I personally would welcome a revival in amateur music, drama,entertainment and sport: we could become producers not consumers.

March 29, 2012 at 12:30 pm #2160

ashvin

Viscount St. Albans post=1757 wrote: Ash: I disagree.
A glance around the globe suggests the entertainment industry persists no matter what. It’s as fundamental as birth and death.

:huh:

I think professional soccer (or “football”) may actually have the roughest time of it, in so far as it has come to rely on coordinated action by many different countries that are only going get more hostile towards each other as their economies contract (not to mention the fans). I wonder what would happen to the World Cup tournament when the EU breaks up? Real Madrid soccer star Ronaldo may end up being repossessed, since he was pledged as collateral to the ECB by a Spanish savings bank (no joke).

March 29, 2012 at 1:25 pm #2162

Basseterre Kitona

Ashvin, interesting thoughts on soccer/football. I should have added the qualifier that I was referring only to pro sports in America in my post above. American cities are so fractured that any many places the only sense of identity is via the teams and their trademarks. Does Detroit even exist anymore outside of the popular olde English “D” that the Tigers baseball team has worn for the past hundred years? Point is that sports are very emotional, very irrational and as long as they remain popular among both the more & the rich then they will be one of the last things to succumb to collapse.

Outside of the US, yes, I could certainly imagine international football being torn apart much sooner. Likewise, it seems that sooner or later the Olympics games will become a disaster of class warfare.

March 29, 2012 at 2:53 pm #2163

Max303

A collapse or significant downsizing of mind-less or violent oriented entertainment is an opportunity for the culture to rebuild itself on a higher foundation instead of the lowest common denominator. Anything that defunds arrogant overpaid actors or ghetto attitude athletes is a good thing. I still think there will be special movies worth seeing and sports, but perhaps after an adjustment, the overpaids in the entertainment business will realize they can still make a good living without the salary of an oil sheik. I see nothing awful about this articles’ forecast, only opportunities for spending our time doing better things.

March 29, 2012 at 6:58 pm #2166

FrankRichards

Hey Max,

What’s the violence factor in The Illiad? How much did global capitalism contribute to it?

March 29, 2012 at 7:50 pm #2167

Reverse Engineer

skipbreakfast post=1758 wrote: Because when something never makes a profit, can it really be called an industry anyhow?

Yes, in fact that is the DEFINITION of Industry. It is always subsidized. You should read Steve’s stuff on Economic Undertow.

http://www.economic-undertow.com/2012/03/25/the-waste-gap/

How many times has the auto industry been bailed out? The airline industry? How about the Railroads? How about Electric Power Companies? The main difference between the Canadian Entertainment industry and all of those is that it probably wastes less and loses less than the other examples do.

RE

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